Adopting a risk-based approach for non-profit organisations

DOIhttps://doi.org/10.1108/JMLC-12-2020-0144
Published date28 June 2021
Date28 June 2021
Pages19-26
AuthorFiras Murrar
Adopting a risk-based approach
for non-prof‌it organisations
Firas Murrar
Administrative and Financial Department, Faculty of Graduate Studies,
Arab American University, Financial Follow Up Unit, Ramallah, Palestine
Abstract
Purpose This study aims to def‌ine how countries can implement a risk-basedapproach (RBA) for non-
prof‌it organisations(NPOs) by measuring how well certaincountries have complied with the FinancialAction
Task Forces(FATF) Recommendation 8, criterion 1(recommendation[8.1]).
Design/methodology/approach This study combines a comparative analysis methodology with a
descriptive analytical approach to compare three member countries of FATF and FATF-Style Regional
Bodies (FSRBs). It uses secondarydata sources, namely, FATF guidelines on the subject and FATF reports
on mutual evaluationreports.
Findings This study examines the variationsin compliance with the FATF recommendation (8.1) among
three countries recently assessed by the FATF: the UK, Bahrain and the RussianFederation. Although the
UK has completely fulf‌illed these recommendations, Bahrain and Russia have largelyfulf‌illed them. These
variations in compliance are mainly attributed to the uneven level of preparedness in the countries
commitmentto the legislative requirements before the process of mutual evaluation.
Originality/value This paper offers insight into the progress of legislation and mechanisms
(technical compliance) in the three countries with respect to recommendation (8.1). This paper also
discusses the evolution of implementing and adopting the RBA among NPOs. This paper concludes
with suggestions to other countries in developing a plan that meets the FATF recommendations by
considering key factors such as comprehensive assessment of threats to NPOs, periodic reassessment
and sharing of successstories.
Keywords FATF recommendations, Non-prof‌it organisations (NPOs), Risk-based approach (RBA),
Terrorist f‌inancing (TF)
Paper type Research paper
1. Introduction
The need for governance of non-prof‌it organisations (NPOs) and the importance of laying
foundations and pillars for transparency in their work have increased over the past few
decades. International efforts aimed at establishing and strengthening these pillars have
become more prominent. The most signif‌icant of these efforts has been the role of the
Financial Action Task Force (FATF). FATF was established in 1989 in Paris by the G7
countries (an intergovernmental organisation comprising seven countries) to enhance
integrity and transparency procedures and combat crimes that threaten f‌inancial and non-
f‌inancial sectors.
The FATF through its recommendations, gave an important space for NPOs by
allocating a recommendationrelated to this vital sector. Recommendation (8.1) stipulates the
main pillars neededto adopt a terrorist f‌inancing (TF) risk-based approach(RBA).
This paper analyses the most importantelements and obligations contained in the FATF
recommendation (8.1) inthe matter of applying the RBA in line with terrorist-f‌inanced risks.
This is done by reviewing the best practices on application, based on the experiences of
three countries: the UK, the Kingdom of Bahrain (Bahrain) and the Russian Federation.
Risk-based
approach
19
Journalof Money Laundering
Control
Vol.25 No. 1, 2022
pp. 19-26
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-12-2020-0144
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm

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